Blockchain technology is having an impact in all sectors. The energy industry is no different, and research is being carried out that shows just how much of the energy industry is exploring blockchain.
At its most basic, blockchain trading in the energy market should deliver the benefits of a decentralised market, facilitate a peer-to-peer trading market allowing consumers to trade directly with lower transaction costs, and increase the transparency of the network.
How the energy industry is getting involved in blockchain
These are the key findings from the World Energy Insights Brief 2018:
- In 2017, an estimated $100–300 million was invested in over 100 energy sector-related blockchain applications
- The power sector has seen the growth of global investment in digital infrastructure increase by more than 20% per annum since 2014, reaching $47 billion in 2017
- At the time the report was published, there were 122 blockchain start-ups operating in the energy space that had raised over $324 million in 2017 alone
- About 45% of the companies interviewed were trialling peer-to-peer (P2P) projects
Use cases of energy-related blockchain projects
In the energy sector, there are many applications that facilitate blockchain trading. Here are just three examples:
Blockchain start-up WePower recently tokenised a year’s worth of Estonian electrical grid data. The project facilitates localised blockchain trading.
This hourly data from 700,000 households was aggregated by address and turned into 39 billion smart energy tokens. The tokens are tradable and can be sold into the local energy wholesale market.
SP Group launched one of the world’s first blockchain-powered renewable energy certificate (REC) marketplaces.
The new marketplace enables local and international organisations to take part in REC blockchain trading.
The Australian city of Fremantle announced a trial in which residential properties will be able to utilise blockchain trading in relation to solar energy.
The RENeW Nexus project is managed through Curtin University and is supported by the Australian government through the Smart Cities and Suburbs Programme.
Wide-scale adoption of blockchain trading
We can see there are plenty of use cases of blockchain projects in the energy sector and also examples of blockchain trading in the industry. So far, the majority of these are localised or smaller scale.
The WEC/PwC research is interesting. The energy executives interviewed generally concluded that whilst there is much being researched and developed, it is still some way off full commercial implementations. So, whilst blockchain has great potential, more time is needed before a wide-scale commercial roll out.
Barriers to blockchain adoption
This is not something that is specific to the energy industry. Coin Rivet recently explored the barriers to wider blockchain adoption.
PwC also surveyed 600 execs from 15 territories about their use of blockchain technology. This was not restricted or targeted to a specific industry. Here are the headline results from their survey:
- 84% of respondents confirmed their organisations have some involvement in blockchain technology
- 52% are in the research or development stage
- 25% are in the pilot or live stage
They also asked respondents what was holding back the adoption of blockchain in business:
- Regulatory uncertainty (48%)
- Lack of trust among users (45%)
- Ability to bring the network together (44%)
This research is similar to the energy research – great potential, lots of research being done, but a large-scale commercial roll out is still some way off.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.